PRECIOUS METALS AND INSURANCE

When Helping with Estate Planning, I am Asked About Precious Metals and Insurance

Investments are assets.  Precious metals are also assets but not investments.  Precious metals do not produce income, investments do.  Investments add to the income section of a profit and loss statement.

Precious metals are in an asset sector called the speculation sector.  When speculators use money to purchase precious metals they are speculating that in the future others will spend more United States currency compared to today when buying, for instance, an ounce of gold.  Speculators guess precious metals will appreciate.  They additionally “bet” if United States currency falls out of favor, future purchasers of the speculator’s precious metals will exchange with the speculators what the speculators need (food, clothing, etc.) in exchange for the precious metals the speculators possess.

Speculating is not a bad word especially when the speculator has self-imposed rules.  Common every day speculators, compared to Wall Street speculators, do not speculate with more than between five or ten percent of their net worth.  Regarding speculation, however, at least precious metals will not turn into a liability.  Comparatively if a speculator speculates with real estate (not for rents, but for appreciation) the real estate is a liability right away because have to pay expenses of taxes, insurance, and maintenance.  A liability adds to the expense section of a profit and loss statement.

  Most life insurance is a liability because there is the expense of a reoccurring premium.  The single type of life insurance investors buy is term insurance, which is much less expensive compared to other life insurance like whole life, universal, etc...  Life insurance is for asset protection or income producing protection.  A provider to a family is an asset to their family because he produces income.  If the provider dies, he wants his family to have a million dollar term life insurance death benefit to invest then live off of the income the million dollars produce since his family will no longer have the income the provider generated while he was alive.